15 Frequently Asked Questions On Bankruptcy In Singapore

In Singapore, bankruptcy is usually considered a last resort option. You should only file for bankruptcy after careful consideration of your options.

If it is the best way to deal with your financial problems, filing for bankruptcy may be for you. This article cannot explain every aspect of the bankruptcy process.

If you still have questions after reading it, you should speak with our bankruptcy lawyers.

1. If my spouse is the guarantor of my debt, should he/she apply to make himself/herself bankrupt as well?

If your spouse is able to fulfil his/her obligations as your guarantor, it is unlikely that your spouse will be required to make such an application. This is because Singapore court will not grant a bankruptcy order unless it is satisfied that the debtor is unable to pay his/her debts. This also applies to creditor’s bankruptcy applications. 

2. If I file a Debtor’s Bankruptcy Application to make myself bankrupt, should I inform all my creditors about my application?

There is no requirement in law for you to do so. 

3. Will the execution of a writ of seizure and sale against me be stopped if I file an application to make myself bankrupt?

No, the application will not stay or stop the execution of a writ of seizure and sale. 

4. Can I still execute the Writ of Summons against my debtor after he is made a bankrupt?

No. What you can do is file a proof of debt against them. At this point, all their affairs are administered by the OA.

5. I have made an alternative proposal for payment to my creditor, but I have not heard from my creditor or its lawyers. Do I need to attend the bankruptcy hearing?

Yes. You should attend the hearing and inform the court that you have attempted to contact your creditor and its lawyers but did not receive any response.

Your creditor’s lawyers will inform the court whether your proposal will be accepted, and if so, its lawyers will either apply for an adjournment o monitor your payments, or withdraw the bankruptcy application against you.

If your creditor does not accept the proposal, the court may adjourn the hearing to give you more time to make an alternative proposal, or the court may make a bankruptcy order against you.

6. What will happen if I do not attend the bankruptcy hearing in Court?

If you have filed a debtor’s application and do not attend the bankruptcy hearing, the application may be adjourned to a later hearing date or dismissed by the court. 

If a creditor has applied to make you bankrupt and you do not attend the hearing, a bankruptcy order may be made against you in your absence.

7. A bankruptcy order has been made against me. I was not aware of the bankruptcy proceedings against me. How do I set the bankruptcy order aside?

To set aside the bankruptcy order, you will need to file a Summons (Bankruptcy) and an Affidavit (Bankruptcy). After filing, you have to serve the documents on your creditor and the Official Assignee.

At the hearing, the court will determine the merits of your application to set aside the bankruptcy order.

8. Will divorce save me from my spouse’s creditors?

The only advantage of getting a divorce is to determine the amount of matrimonial assets your spouse would get. With a divorce, unless you are a guarantor for your spouse’s debts, creditors will not come after you.

However, it is recommended that you not leave your savings in any joint account as a bank may deduct money from the joint account to satisfy part or all of the debt.

If it is a credit line, overdraft facility or credit card account, both of you are jointly and individually liable for the credit spent. You are advised to withdraw your name from the account, and pay off the debt in full and close the account to stop further action against you. 

9. How do I protect my assets if my spouse is declared bankrupt?

Your spouse’s creditors only have claims over money that is held in your spouse’s name, whether solely or jointly with any other person.

Unless you or your children acted as guarantors for your spouse’s debts or are co-borrowers, your spouse’s creditors cannot touch your money or assets.

However, with regard to non-essential items in your home, if your spouse’s creditors have obtained a writ of seizure and sale against such items, you must prove that you alone paid for these items in order to prevent the creditors from auctioning off the items.

10. Will my family be liable for my debts? E.g. a child being liable to the debts of his father?

Creditors may make the family members of a bankrupt liable only if the family members are co-borrowers on a mortgage loan, an unsecured line of credit or under a hire-purchase agreement.

Family members may also be made liable if they acted as guarantors for the bankrupt’s debts. 

11. Will any proceeds from a sale of property go to the bankrupt? 

After full payment has been made to a bankrupt’s creditors, the bankrupt shall be entitled to any surplus. However, proceeds from the sale of investments made prior to bankruptcy using CPF monies will be credited into the bankrupt’s CPF Investment Account or Special Account. 

12. Can I trade in shares?

A bankrupt is allowed to sell previously owned shares but he is not allowed to purchase any new shares.

13. A bankrupt borrows from me without informing that they are an undischarged bankrupt. What can I do?

Write to the OA office for their investigation. 

14. What if the debtor is unhappy with the payment plan under the Debt Repayment Scheme?

The debtor who is unhappy with the plan or any modification made to it may file an appeal with the Appeal Panel. The notice of appeal must be filed no later than 14 days as of the OA’s notice of the approved scheme.

15. What if the debtor’s personal circumstances change after the commencement of the payment plan?

The debtor must inform the OA of any change in his personal circumstances, particularly where the change may affect his ability to comply with the terms of the Plan. The OA may then consider modifying the plan. 

Conclusion – How We Can Help

If you have further questions that are not answered by the above, and are facing problems in relation to bankruptcy whether as a debtor or creditor, please contact our lawyers and we will have a fruitful consultation on your issues and your available options. 

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How To Avoid Bankruptcy In Singapore

Being declared bankrupt is hitting rock bottom for most people. The stigma and restrictions that come with being declared bankrupt can be extremely disruptive to your everyday life and even with gainful employment, recovery can be very difficult. Therefore, avoiding bankruptcy in the first place is the best option.

What Are Your Options?

What is important to bear in mind is that avoiding bankruptcy essentially means taking actions to prevent a bankruptcy application from being taken out against you by your creditors.

To this end, you must not ignore your creditors’ Letters of Demand, Statutory demands or Writs of summons from Court. This is because if you refuse to respond or decline to accept service of their documents, you may be presumed to be unable to pay your debts, and be made a bankrupt on that basis.

Therefore, the key question is how you may prevent creditors from making the application in the first place. The following are a few options you may consider.

Debt Repayment Scheme (“DRS”)

If what you owe is not more than $100,000, you may be referred to the Official Assignee (“OA“) to assess if you are eligible and suitable to enter into the DRS.

The DRS is an attractive option as it prevents creditors from proceeding or commencing legal actions against you without the leave of the court from the date the DRS commences to the date that the DRS ceases.

Furthermore, your debts will be repaid according to your repayment schedule over a fixed period of time, which will leave you with some measure to exercise control over your finances from the grant of the DRS since creditors will no longer be able to hound you for their whole amounts.

Lastly, you will not be under the same restrictions that bankrupts face.

Private Arrangements

You may enter into private arrangements with your creditors. This is in effect a binding contract and/or a settlement agreement between parties. However, you should be aware that should you not comply with the private arrangement, this will also be grounds for creditors to commence bankruptcy proceedings against you. The creditor may be also able to claim more than previously if it is able to prove that the amount owed by you has increased due to the breach of the private arrangement.

However, the advantage of private arrangements is that the parties remain fully in control of the repayment process. The terms and conditions of the repayment are a matter of negotiation between parties.

Therefore, you can enter into a private arrangement with creditors to pay debts by instalments, at an agreed upon amount and time. Further, it is also possible to reschedule payments or being granted an extension of time to liquidate assets or seek other financial sources to repay debts.

It is recommended that you be truthful and honest with your creditors on your financial position at this stage. This prevents creditors from issuing statutory demands due to a lack of clarity on when they may expect repayment, which will force you to respond as ignoring or non-payment of the statutory demand constitutes grounds for the creditors to make a bankruptcy application against you.

Voluntary Arrangement

You may also apply to court for an interim order for a Voluntary Arrangement (VA) under Part V of the Bankruptcy Act (“BA“). Essentially, a VA is a formal arrangement between you and your creditors to repay the debt. However, you must be supervised by a nominee. The nominee specified must be a:

Registered public account; or
A lawyer; or
A person gazetted by the Minister.

A VA comes with significant advantages as opposed to bankruptcy. Firstly, if you can show that you intend to make a proposal for a VA, you will be able to apply for an interim order. The function of the interim order is to suspend any action or legal proceeding already pending against you, and prevent any action or legal proceeding from being initiated against you. Secondly, the VA does not impose restrictions on you that a bankruptcy order would.

However, after the interim order is granted by the court, you must work with your nominee and disclose all assets and liabilities and make a proposal on how you intend to repay your debts to your creditors. Otherwise, the interim order may be discharged.

After your proposal is made, your nominee will prepare his report and summon a creditors’ meeting for the purpose of approving the proposal. If the VA is accepted by the creditors during the creditors’ meeting, the VA will be successfully implemented and you and all creditors who were entitled to vote at the meeting will be bound by the terms of the VA.

However, please be aware that if you do not comply with the terms of the VA, any creditor bound by the VA may make a bankruptcy application against you.

How We Can Help?

As can be seen from the above, the best methods to avoid bankruptcy is to get in contact with your creditors and negotiate with them to stop them from serving a statutory demand or an official document demanding payment.

If they do so, that will constitute grounds for them to commence bankruptcy proceedings against you. If you wish to avoid bankruptcy and require representation to work out solutions with your creditors, please contact us and we will have a fruitful consultation with you on your available options.

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